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South Africa’s $11m EPF Tech Fund expands into Africa

By , Africa editor
Africa , 23 Jan 2024
Jacqueline Govender, CEO, EPF Tech Fund.
Jacqueline Govender, CEO, EPF Tech Fund.

Empire Partner Foundation's (EPF) multi-million rand tech fund is exploring investment opportunities in Africa, while simultaneously developing strategic connections with companies and foundations across the continent to co-invest and amplify impact.

Jacqueline Govender, CEO, EPF Tech Fund told ITWeb Africa: "We're actively engaging with our portfolio firms and possible investors, focusing on high-growth digital startups addressing difficulties in areas such as accommodation, education, financial inclusion, rural and community development.

She added: “We’re now also expanding our geographic reach beyond South Africa."

According to Govender, the fund is seeking to invest in young, high-potential, innovative entrepreneurs to drive economic development across the continent through technology.

Govender said the EPF Tech Fund, which currently has $11 million (R200m) to fund new entrepreneurs, is raising an additional $4.2 million (R80m) to invest in students and graduates building technology solutions that could have a significant impact.

The fund's expansion will be welcome news, as a lack of funding is one of the most significant challenges entrepreneurs face in Africa, according to global research firm, Infomineo.

Infomineo said in blog: “The African startup ecosystem was trapped in the grip of a terrible and unexpected reality: a funding freeze that would send shockwaves across the continent.”

It added: “Start-ups in Africa received $3.4 billion in funding in 2023, including equity, debt, and grants. This is a 32% decline from the over $5 billion recorded in 2022, with equity funding alone experiencing a 60% reduction.”

For enterprenuers to receive EPF Tech Fund support, according to Govender, start-ups must have locally built digital solutions, be led by young people, and be scalable across multiple African countries.

Govender also said AI is a driving force behind all the fund’s technology investments. “Every portfolio firm must achieve the basic criteria of adopting AI into its operations,” she added.

"We see enormous potential in AI-powered solutions that address social concerns, such as education, climate change, unemployment, poverty, and access to healthcare. We're looking at firms that use AI for sustainable livelihoods, financial inclusion tools, and data-driven healthcare and ESG systems."

Planting a seed

In a wide-ranging interview, Govender outlined EPF Tech Fund’s formation. She said: "We identified a gap in the venture capital market, where investment was not reaching breakthrough tech businesses solving social concerns.”

Inspired by the potential of young African tech innovators, the fund was originally created to help support ventures and make a “positive impact across the continent."

She said that investors include organisations dedicated to "future proofing Africa” by investing in “youth-led technology solutions that are scalable across the continent”.

"Unlike typical VCs, financial returns are only one part of the puzzle. We systematically evaluate firms based on their ability to provide verifiable social and environmental benefit while maintaining great financial prospects.”

The fund also supports its portfolio companies with mentorship, market access, and impact measurement tools.

"Our investments typically range from R5 million to R20 million, with a focus on angel, pre-seed, and seed stages."

"We believe in developing promising ideas in their early phases and guiding them through the key early growth phase. However, we are adaptable and will explore great firms in later stages if they line with our impact and investment approach.

"Our main points are effect, purpose, and possibility. Beyond a sustainable business, we look at how a venture improves people's lives and connects with our impact areas,” she concluded. 

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